FIFA announces USD 369 million loss with worse to come

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FIFA announces USD 369 million loss with worse to come

Zurich, Apr 7 (AFP) FIFA today announced a USD 369 million loss for 2016, a second straight annual deficit, as it recovers from bribery scandals and acknowledged it had spent a huge chunk of its reserves in the past year.

The game’s world governing body blamed the cost of investigating the scandals, bad investments and accounting changes. But there is worse to come for the organisation, which is rebuilding after its near collapse at the end of the tainted Sepp Blatter era.

It expects to lose USD 489 million, before tax, in 2017 before a World Cup revenue bonanza in 2018 rescues the accounts.

FIFA’s losses for 2015-2017 are set to hit USD 910 million (855 million euros) even though it revised its 2015 deficit down from USD 122 million to USD 52 million.

Revenues fell to USD 502 million in 2016 from USD 544 million in 2015.

FIFA said its reserves had fallen from USD 1.4 billion in 2015 to USD 1.04 billion in 2016 and they are expected to crash to USD 605 million this year.

FIFA is banking on making USD 1.1 billion in profits in 2018 when the World Cup is held in Russia, which would give a surplus of about USD 100 million for the organisation’s four-year accounting cycle.

The organisation said the bumper profits, mainly from television deals, would help bring its reserves back to USD 1.7 billion in 2018.

Since a police raid on a FIFA congress hotel in May 2015 when seven football officials were arrested, Blatter and his two top deputies, secretary general Jerome Valcke and finance officer Markus Kattner, have been suspended or fired.

The three awarded themselves huge bonuses and pay rises during their final years in power and all face criminal investigation.

New FIFA president Gianni Infantino took over promising reform but also higher payments to the 200-plus national federations that are now costing FIFA dearly.

Hailing his moves toward greater transparency, Infantino said: “The gravity of the crisis that assailed FIFA in recent years called for equally radical measures. Our response was to express our unshakeable commitment to drawing a line under the events that had so tarnished the image and reputation of the organisation.”

Infantino’s annual salary was stated in the accounts at USD 1.5 million, less than half that of Blatter.

FIFA said the main cause of the 2016 loss was new accounting rules. Before they booked profits when contracts were signed, now they can only be counted when the contract, such as the World Cup, is completed.

Accounting experts said, however, this change would only account for about USD 35 million of the 2016 loss.

FIFA also spent USD 50 million on investigating the lingering scandals.

– Museum loss –

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US authorities have charged about 40 individuals and companies over more than $200 million in bribes paid for television and other commercial deals. Many of the defendants, who are to go on trial in New York in November, are former FIFA executive members.

But the organisation also admitted that it lost USD 50 million on the FIFA museum that was a pet Blatter project.

FIFA spent 140 million Swiss francs (130 million euros/USD 138 million) on the three-floor museum in Zurich which has become a huge white elephant.

Since opening last year, it has attracted an average of 11,000 visitors a month, barely half the target.

The organisation also suffered a multi-million dollar loss on its investment in the Ascot Hotel in Zurich which is near the museum.

Amid the scandal fallout, Infantino has had to find ways to fund his promise to triple payments to national federations from USD 1.6 million every four years to up to USD 5 million.

Despite the red ink headlines, FIFA’s leadership says the organisation is not in trouble.

The organisation predicts revenue of USD5.65 billion for the four-year cycle ending with the 2018 World Cup. It said there are contracts for 76 percent of this figure. AFP AH AH